Oct. 2, 2015
Bill Murphy & Harry S. Dent Jr.
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- Fed officials have no intentions of hiking rates in 2015, despite the hawkish rhetoric making the media reports.
- Financial debt-bubbles are typically followed by deflation, not inflation, which is a key reason why Fed policymakers hands are tied.
- Too many money managers piled into the risk-off, long-only trade - the unwinding process could be more protracted than anticipated
- The recent equities selloff could be merely the opening salvo of a new downtrend in equities, culminating with multiple price implosions.
- The downtrend could persist throughout 2016.
- The housing, echo-boom of 2009-2015 is losing momentum as investors / builders brace for higher rates.
- Household income per capita has plunged since 2008, more than $5,000 - eroding another key housing demand factor.
- Harry S. Dent notes the new long-term downtrend in housing.
- He expects the market to drop by at least 40-50% on average and much more in frothy regions.
- The net result will be buying opportunities for those who anticipating the sea change event.
- The HGX Housing Index, appears to be developing the most bearish of all technical price patterns (Figure 1.1.).
- Due to Fed intervention, risk was removed from the markets, that is until recently.
- Even hedge funds that are supposed to ameliorate risk, employed long-only investment strategies to remain competitive.
- However, without the Fed rate panacea, the threat of higher rates rattled the markets.
- The duo discuss the growing crowd of cognoscente who insist that the precious metals (PMs) markets are manipulated.
- Bill Murphy agrees with friend of the show, Jim Rogers, that a currency crisis could unfold, sending the precious metals skyward.
- For instance, the Argentine currency dilemma resulted with a 100% in the price of gold in approximately 12 months (Figure 1.1.).
- The next bull market in gold / silver and related equities could unfold at an alarming pace, making the prescribed accumulation via dollar cost averaging all the more sound an investment strategy.
- Despite months of hawkish jawboning by Fed policymakers, the benchmark overnight lending rate will remain fixed at .25 at the next FOMC meeting, with a 91% probability (Figure 1.2.).
- The duo ask the poignant question, "What do Fed policymakers know about the domestic economy, that is holding back the inevitable rate hike?"
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